Shares of Louisiana-Pacific Corporation LPX scaled a new 52-week high of $24.96 on Mar 31. The homebuilding company’s stock has risen 31% year to date, outperforming the Zacks categorized Building Products – Wood’s gain of 11.5%.
What’s Driving It?
Louisiana-Pacific manufactures and sells building products, primarily for use in new home construction, repair and remodeling, and outdoor structures, as well as light industrial and commercial construction.
Much like other major homebuilders, KB Home KBH, NVR, Inc. NVR and PulteGroup Inc. PHM, Louisiana-Pacific is on a rally these days buoyed by the current positive housing scenario. Recently released reports hint at growth for the homebuilding sector this year. Homebuilders’ confidence for March reached the best level in the last 12 years. Additionally, new home sales and residential construction data were also positive.
Steady job and wage growth, a recovering economy, moderating home price gains, historically low interest/mortgage rates, rising rentals, rapidly increasing household formation and a limited supply of inventory, point to strong demand in 2017.
Louisiana-Pacific is well poised on these positive housing fundamentals. The company registered positive operating earnings in 2016 for the first time since 2013. Impressive earnings came on the back of higher North Central Oriented Strand Board or OSB prices, along with 36% growth in Siding segment EBITDA where Louisiana-Pacific is gradually gaining traction.
In 2017, the company expects demand for housing to increase, driven primarily by higher household formations and wage growth.
The company carries a Zacks Rank #1 (Strong Buy) and witnessed an average positive earnings surprise of 66.28% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Louisiana-Pacific expects earnings growth of 71.4% in 2017 on 13.2% higher revenues. Again, its trailing 12-month Return on Equity (ROE) ratio is 11.56% compared with the industry average of 7.71%. This indicates that the company reinvests more efficiently than its peer group.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment